Rogers' Rotors Has Debt with a Market Value of $250,000,preferred

question 58

Multiple Choice

Rogers' Rotors has debt with a market value of $250,000,preferred stock with a market value of $50,000,and common stock with a market value of $750,000.If debt has a cost of 7%,preferred stock a cost of 9%,common stock a cost of 13%,and the firm has a tax rate of 30%,what is the WACC?

• A)8.64%
• B)9.12%
• C)9.33%
• D)10.88%

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Definitions:

Operation of Law

Operation of law refers to rights or duties that are automatically assigned to a person by virtue of legal rules, rather than by acts or agreements of the parties involved.

Examination Under Oath

A formal questioning process in a legal setting where the person being examined swears to tell the truth.

Actual Prejudice

Harm or disadvantage that occurs as a result of delays or errors in the legal process.

Adjuster

An individual or entity that assesses and settles insurance claims on behalf of an insurance company.